SMM Evening Comments (Sep 22): Shanghai Nonferrous Metals Closed Mostly with Gains amid Restoring Market Confidence

Published: Sep 22, 2022 18:00 (GMT+8)
Shanghai nonferrous metals closed mostly with gains as the market confidence is gradually restored after the US rate resolution announced early morning was in line with market expectation. And the downstream restocking ahead of the National Day holiday is also an anticipated bullish factor.

SHANGHAI, Sep 22 (SMM) – Shanghai nonferrous metals closed mostly with gains as the market confidence is gradually restored after the US rate resolution announced early morning was in line with market expectation. And the downstream restocking ahead of the National Day holiday is also an anticipated bullish factor.

Shanghai copper lost 0.19%, aluminium gained 0.54%, lead jumped 0.27%, zinc advanced 0.77%, tin rose 1.9%, and nickel fell 0.48%.

Copper: The most-traded SHFE 2210 copper closed down 0.19% or 120 yuan/mt at 62,430 yuan/mt, with open interest down 8,184 lots to 123,593 lots.

In the spot market, standard-quality copper was mostly in premiums of 530-540 yuan/mt in early trade, with little difference with good-quality copper. And there were few quotes from hydro-copper. After the SHFE 2210 and 2211 contract spread expanded from 510-560 yuan/mt to 550-600 yuan/mt, the cargo holders slightly lowered the premiums in order to gain cash. And the premiums of standard-quality copper fell to 500-510 yuan/mt. In the second trading session, the SHFE contract spread narrowed, the spot premiums rose, and market transactions were still poor.

Aluminium: The most-traded SHFE 2210 aluminium closed up 0.54% or 100 yuan/mt to 18,685 yuan/mt, with open interest down 5,985 lots to 138,996 lots.

In the spot market, spots were in discounts of 50 yuan/mt over SHFE 2210 in east China, and in discounts of 80 yuan/mt over SMM A00 aluminium price in Gongyi. On the macro front, the bears arising from US rate hike were basically digested as the final rate resolution was in line with market expectations, and the market confidence was gradually restored. The downstream was slightly more willing to purchase, especially for the upcoming National Day holiday.

Lead: The most-traded SHFE 2210 lead closed up 0.27% or 40 yuan/mt at 15,005 yuan/mt, with open interest down 7,216 lots to 32,980 lots.

In China, the consumption in the lead-acid market was relatively promising, and the supply of refined lead was tight with the on-set of pre-holiday restocking when the secondary lead smelters have not yet resumed the production. Lead ingot inventory fell as a result. SHFE lead contract continued to outperform LME lead.  

Zinc: The most-traded SHFE 2210 zinc closed up 0.77% or 190 yuan/mt at 24,840 yuan/mt, with open interest down 3,649 lots to 91,418 lots.

LME inventory fell to the 60,000-mt level, aggravating supply tightness of spots. SHFE contract rebounded slightly after the announcement of US rate hike in September. However, domestic consumption was still poor, easing the supply tightness. Coupled with the expected supply growth, SHFE zinc is unlikely to gain further momentum from the fundamentals.

Tin: The most-traded SHFE 2210 tin closed up 1.9% or 3,440 yuan/mt at 184,400 yuan/mt, with open interest down 1,679 lots to 28,042 lots.

In the spot market, the quotes offered by the smelters rose slightly in early trade along with rising futures prices, and some smelters were cautious in light of volatile prices. According to the traders, the sources for the brand Yunxi were scarce, and the spread of quotes between different brands were narrow. Some traders raised the quotes following the SHFE contract, and the transactions in the spot market were mostly in small mount. The downstream demand was greatly suppressed by rising prices today.

Nickel: The most-traded SHFE 2210 nickel closed down 0.48% or 940 yuan/mt at 196,800 yuan/mt, with open interest down 10,574 lots to 73,641 lots.

On the supply side, pure nickel imports were still in the loss-making territory, while pure nickel inventory in China and abroad were both low. For NPI, the market was in a stalemate with poor transactions. Nickel pre prices rose slightly recently, and NPI prices were underpinned with cost support. Meanwhile, NPI plants were firm to their prices in light of stabilising stainless steel prices. On the demand side, the spot prices of stainless steel in Wuxi and Foshan were stable as a whole, and the transactions were moderate though it has not revived the terminal sector. For alloy, the market players were generally on the sidelines in light of high pure nickel spot prices. To sum up, high nickel prices were not transmitted to downstream sectors smoothly, and SHFE nickel price has deviated from the fundamentals.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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